Questions About Financing New Vehicles

british_rover · August 2006

I don't recomend that anyone should lease a car out of warranty. Have they changed the warranty on chevy trucks or is it still just 3 years 36,000 miles? If the truck does have a 4 years 50,000 mile warranty then that is not so bad but if it is 3 years 36,000 miles and something major breaks on the truck then you are responsible for fixing it and you won't even own the truck when the lease is up.

grandtotal · August 2006

Please don't take this the wrong way, but so what? If something major breaks on your truck and you are buying it with a loan (or own it outright) you still have to fix it. What does it matter who actually owns the truck it's still broken and still needs to be fixed.

british_rover · August 2006

In general I just do not think it is a good idea to lease out of the warranty. I think a lot of people feel the same way on that. I also don't think it is a good idea to lease cars that do not offer pre-paid maintance. That is something that plenty of people will probably not agree with.

snakeweasel · August 2006

I agree with you, with a lease (especially one of 4 years) you are effectively buying the car with all the rights and responsibilities of ownership. Part of those rights and responsibilities is maintaining the car. If you take BR's logic one step further you should never lease a car since you may have an accident which is your responsibility to fix.

qbrozen · August 2006

I think some of you look at leasing the wrong way (or just a different way, i suppose). I look at it as a guaranteed buyer for my used car. If I purchased the vehicle, I'd need to keep up with maintenance and repairs ... and then sell it down the line. If I lease it, guess what? I still need to keep up with maintenance and repairs and sell it (or turn it in for a predetermined value) down the line.

Now, I agree, to a point, that leasing out of warranty is not ideal, but only because you are then negating one of the main positive points of leasing (always having a car in warranty).

grandtotal · August 2006

In general I just do not think it is a good idea to lease out of the warranty

Well, in the absence of any solid factual reasons, I'm left with the conclusion that this is your personal prejudice. That's quite OK, I have my own opinions that do not always stand up to reason too.

grandtotal · August 2006

Buying or owning a car out of warranty is not ideal either. I take a calculated risk when I do it.

snakeweasel · August 2006

Buying or owning a car out of warranty is not ideal either.

So me driving around in my paid off, not giving me any trouble but out of warranty car is not ideal? So I should spend an extra $300 a month just so I have the insurance that a warranty gives?

grandtotal · August 2006

So me driving around in my paid off, not giving me any trouble but out of warranty car is not ideal?

Correct, as far as I am concerned.

snakeweasel · August 2006

Correct, as far as I am concerned.

So as far as you are concerned I should replace my trouble free car that I am not making any payments on and is not costing me any money except for gas, insurance and normal routine maintence with another trouble free car that will still cost me gas, insurance and normal routine maintence but will also include a monthly car payment?

Ok so I spend more money for nothing.

grandtotal · August 2006

So as far as you are concerned I should replace my trouble free car that I am not making any payments on and is not costing me any money except for gas, insurance and normal routine maintenance with another trouble free car that will still cost me gas, insurance and normal routine maintenance but will also include a monthly car payment?

No, you are putting words in my mouth. I am saying that that situation is not ideal. The reason I am saying that is that a fault may develop necessitating an expensive repair. If the vehicle is under warranty the manufacturer would pay for it, if it is not then the owner must pay and that situation is not ideal. I'm not saying that you or anybody else should not do it, in fact one of my vehicles currently is out of warranty and another will be next week. But, be aware, that there is some unquantifiable financial risk associated with driving an out of warranty vehicle whether it is paid for or not.

snakeweasel · August 2006

I am saying that that situation is not ideal.

But I am saying it is an ideal situation. Case in point since I have paid off my car I have saved about $2k in car payments and put out about $200 in repairs. That means I am about $1,800 ahead of the game. At the end of the month I will be over $2K ahead again. So what if I need a major repair in a week thats going to cost me a grand, I am still ahead of the game. :shades:

As long as my repair costs (thats the actual cost of the repair and any inconvience) is less than a car payment then it is ideal to have no car payment and drive a car that is out of warranty. Otherwise you are just tossing away your money.

tamaraster · August 2006

> it is ideal to have no car payment and drive a car that is out of warranty

Agreed. The worst that can happen (in terms of the "risk" spoken of earlier) is that your car will not function. The highest possible cost of that is that you would buy a new car (if the old car is too expensive to repair), in which case you would have a car payment every month. Removing that risk requires buying a car and having a car payment. So which is worse, having some risk of needing to buy a new car and make a car payment, or having a 100% chance of having a car payment? Obviously the former.

It's true that having a car out of warranty is "not ideal." But it is probably the best choice in the real world. It's definitely better than buying a whole new car just to be under warranty.

grandtotal · August 2006

As long as my repair costs (thats the actual cost of the repair and any inconvenience) is less than a car payment then it is ideal to have no car payment and drive a car that is out of warranty. Otherwise you are just tossing away your money.

That's your opinion. My opinion is different. I don't have to justify my opinion for you but I will because I'm feeling in an amiable mood this afternoon.

My view of the cost of inconvenience and yours may not coincide, personally I place a very high value on that inconvenience (even more so if it is in the desert or on a dark and snowy highway without a shoulder at night that my vehicle chooses to break down). I also value extra safety features that a newer car has, difficult to put a monetary value on but if it happened to save your life or prevent a more serious injury then a newer vehicle has extra value to me.

As I said before, very soon two of my vehicles will be out of warranty (they are all paid for) and I shall continue to drive them until I feel that I would be better off for the reasons outlined above in a new vehicle.

This is my last post on the subject because we are off topic. Feel free to respond, I'll read your response but no matter what your response may be I shall not reply.

snakeweasel · August 2006

I place a very high value on that inconvenience (even more so if it is in the desert or on a dark and snowy highway without a shoulder at night that my vehicle chooses to break down).

Just remember new cars break down too, so if my older car is running well why should I feel that the risk of said break down be much greater, especially in a well maintained car.

I also value extra safety features that a newer car has,

The chances of me getting into the accident where I would be killed in my car when I wouldn't have been in a new car, or that I would have been significantly less injured in a new car are slim. Its not like I am driving a car from the 1950's

slipper · August 2006

I want to get the new avie for better mileage etc. the new motor is a concern. There maybe problems down the road a couple yrs. Due to the gas problems there was a hurry up to produce a better motor for fuel concerns. I am just thinking buying would be a better deal if I am willing to put $5000 down. I do have to pay off my 04 witha bal. of 19,200. I hate to have a huge payment but I only get 14 mpg. The gas prices are a problem for me. I am a sales rep. I am concerned about the limited mileage. Thanks for your input.

grandtotal · August 2006

How much better do you think the mileage is going to be in a 2007 Avalanche versus a 2004 Avalanche?

snakeweasel · August 2006

I want to get the new avie for better mileage etc. the new motor is a concern.

No offense but if your paying $47,500 for a new vehicle is gas use really an issue? Plus the '07's get barely better gas mileage than the '04's

I hate to have a huge payment but I only get 14 mpg.

Having a huge payment and getting 15 MPG isn't much better. But seriously there are plenty of options that will give you less in payments and 2+ times the gas mileage.

slipper · August 2006

Do you think Chevy will be offering some incentives later on to get us to buy so we will be using the new e85 fuel to wean us off gas? Maybe Bush will help out!!!!We will be having plants in Ne. maybe it will be alot cheaper here.The new 07 is supposed to get between 20-25 on the hiway and 17 in town. Regardless it sounds like leasing is not a good deal from what you have said.It did scare me too many paragraphs of terms.
thanks

snakeweasel · August 2006

IIRC the '07 gets 21 highway and 15 city as opposed to 20 and 14 for the older ones (EPA estiments). One thing to consider, with E85 expect to lose 20-30% of your fuel economy.

slipper · August 2006

I am so thankful for this site. I did not know about the loss of fuel economy with E85. This has been such a learning experience for me. I am really re-thinking if I even want to get a new avie at all. I really like my 04. I was hoping to save on gas and maybe upgrade while mine was still trade worthy. Maybe I will just keep it. Thank you so much for all the good advice.

wlbrown9 · August 2006

Another question...Do you really need a Truck with a bed or would a SUV type vehicle work for you? GMC has a new crossover SUV (Acadia) coming out this year, about the same size as a Yukon/Tahoe but more car like instead of Truck like. The EPA ratings look to be about 25 MPG (V6, 6 sp trans) highway, so that might give you a little better mileage. BUT that difference is probably not enough to offset additional depreciation on a new vehicle. According to my calculator, if you drive 15,000 miles per year getting 20 MPG and $3 gallon, you spend about $2250 /yr in gas. If you go up to 25 MPG with the same mileage and $3 gas, you spend about $1800 /year. So, that would save you $450 per year. The $450 per year is a drop in the bucket of your total vehicle expense assuming payments, upkeep, insurance, factoring in depreciation, etc.

Another thing to think about...once your Avie is paid off you will probably has as much equity in it, if not more than you do now.

platinumbird1 · September 2006

If a dealership is offering this kind of deal and you know that your credit score is above 700. How do you approach the F&A to start the financing process? Thanks for any input!

doloresnava · November 2006

I went in last week to get a Yukon and traded in my 2003 Envoy. I signed the contract and everything was fine. On Tuesday I get a letter from my bank telling me they can not finance me. In a way I was relieved because the moment I had signed the contract I was already regreting it. So I go to the dealership and tell them what is going to happen? They tell me to give them a couple of days to find another bank or a better deal, but the thing is I want to get out of this contract while I still can. It's been a week and three days and they still don't have nothing. My question is " How many days do I have to give them by law to try to find a bank to finance me? , because I want out of the deal.

grandtotal · November 2006

Are you driving the Yukon? If so I think you just have to wait it out and see if they can get you financed. If not I'd go back today and unwind the deal before they get you financed.

dtownfb · November 2006

the issue is whether or not they still have your 2003 Yukon on the lot. If so, no big deal. tear up the papers and all it a day. doloresnava, you need to take the initiative and call the dealership to find out what is going on. I would drive down there and talk to the manager. It's too easy for them to "avoid" you on the phone.

Good luck.

doloresnava · November 2006

But what I get out of what you said is that I can just go and tell them forget it, I thought their was a law that you had to give them all the time they wanted. I've been to the dealership and they send me home I have gone 4 times. and everyday they tell me to give them more time, so you are saying I don't have to give them any time, well that sounds good but can you please verify that their might not be some sort of law that makes me have to wait. I really need to get out of this deal b/c I am going thru a divorce now and I really wont be able to make it now. :confuse:

asingh80 · November 2006

people i need some help deciding if i can afford the 2007 infiniti g35....some details below:

2007 G35 AWD
premiuim
nav
wood trim
splash guards

Price: $38540 after negotiation

downpayment: $10,000
sales tax: 6%
title and license: not sure how much, should be around $160

i would like to keep my monthly below $550 for a 60 month period. when i run the estimate payment calculator on infiniti site i use

$38,540 (MSRP)
$160 (title& license)
$2,312.4 (salestax)
6% (finance rate)
= $40440 as estimated selling price
$10,000 as downpayment

giving me a monthly of $599!

what's the best way to bring down the monthly (if possible)? any advice on increasing downpayment, looking for better finance rates, neogotiating further etc will be helpful.....i don't have a pre-approved loan /finance rate as of now so i am just taking the worst case scenario based on my credit history (credit score of 731)....what matters to me is your opinion on this, even if it's waiting for the price to come down...

TIA

jb_turner · November 2006

Based upon your scenario you need a downpayment of
$11,992 to get a monthly payment of $549.98.

jbroom · November 2006

I just got approved for a loan through the online capital one finance deal. i told them, via their online forms, that i was looking for a 72 month term loan for a new/used car for a maximum of $25k.

the rate i got back was 7.7% .... that doesn't sound to bad, but with a credit score of about 740 i was hoping for better. should i try one of the other online loans, or does this sound like a good going rate? i'm nervous about having multiple people checking my credit.

i'm also looking into what kind of special rates the dealership might have, but i found the car i want (element sc) used with about 2,000 miles on it and almost $2500 cheaper that i was going to try to get. according to my calculations, if the dealer can give me a 4% APR it comes out to the same payment.

dtownfb · November 2006

So were they able to get you financed????

dtownfb · November 2006

6 years is a long time to finance a car.

Check you local banks for rates. NOrmally they can be found in the newspapers. See what a dealer can do. With your credit score, you should qualify for any special financing.

cmmiller22 · November 2006

Hi Folks,
I'm looking for some advise regarding a truck that I want to trade that I currently have financed. I just bought an '01 Chevy truck and financed 15k with Capital One. The truck was purchased by me, with an agreement with my employer that I would receive a car allowance to keep the truck for business purposes. The job situation is going south and I now want to get out of the truck b/c I will not be able to make the payments. I want to 'trade down' to a less expensive, used vehicle. The issue is that my trade value is somewhere around 12k, but I owe around 14, 700 on the truck. Are finance companies willing to take the negative equity and build it into the sale of a different vehicle of lesser value? I am looking at a Jeep Cherokee for about 7k and I'm not sure if I will be able to get out of the truck and into the Jeep, given my situation. Any advice would be much appreciated!

dtownfb · November 2006

A couple of questions: How long have you had the truck? how many payments have you made? how did you determine the trade-in value?

the reason i am asking these questions is your trade value dropped $3k and the amount you owe is only $300 less than what you financed.

abhiutd · December 2006

Ppl, I have a basic financing question about my TSX i financed for 60 months and the amount was 24000. I'm paying 470 as the monthly payment @ 4.9%.Is the interest calculated on the initial financed amount ?
If i pay more than 470 a month would i be able to save some of the interest?Someone told me interest amount is fixed so even though if you pay the amount earlier than 60 months you would still have to pay the interest amount calculated on the financed amount.
Thanks in advance.

tidester · December 2006

It appears you financed a little more than $24,000 (otherwise your payments would have been about $452).

In principle (no pun intended), payments above the calculated monthy payments should be applied directly to the principal and that should reduce the total amount of interest you pay. However, that depends entirely on the terms of the agreement you signed at the time of financing. You may have agreed to pay a fixed total but I doubt that.

Your contract most likely has a clause for dealing with early payoff which generally includes some kind of fee but with a refund on interest. In effect, if you "keep" what you borrowed for the full term of the loan then you can't be charged interest for the full term.

tidester, host

tidester · December 2006

With a pocket calculator and a little practice you too can calculate loan payments and interest!

tidester, host

cccompson · December 2006

Or, if you're like me, loan calculators available all of the internet (I like yahoo's) will lay out an amoritization table for you.

tidester · December 2006

That's true but I'm rarely in front of a computer when I need the numbers.

tidester, host

timetobuy1 · December 2006

This is regarding a new 4Runner:
I would like an opinion on whether it makes more financial sense to buy a 2006 at 1.9% interest rate or a 2007 at 4.9%. I dislike the idea of paying more interest and the price would certainly be better on a new 2006 but maybe I should just get the newest model???

tidester · December 2006

In terms of monthly payments, there won't really be a huge difference between the two if you finance over three years ($28.60 per $1,000 vs. $29.92 per $1,000). Of course, you will end up paying more interest on the newer vehicle.

I suggest visiting Buying New vs. Used Vehicles for more insights.

tidester, host

timetobuy1 · December 2006

Thanks!

timetobuy1 · December 2006

I appreciate the answer tidester. I just posted there. I just wonder if there is another place to post also since both vehicles I'm considering are new. One is just a 2006 and the other a 2007 of the same type 4Runner. I'm just not sure whether you end up losing more money because you bought an older model new car as opposed to the newer model car.

tidester · December 2006

Another fnancial consideration would be the resale value of each vehicle after, say, three years. E.g. the difference in value of 2003 vs. 2002 4Runners can be about $3,000 and you can expect similar differnces in three years for the 2006 and 2007 models.

You may want to discuss differences in features in Toyota 4Runner.

tidester, host

beckettbank · December 2006

I am in the market to buy a new/used car. My credit though is not too good after having a bankruptcy discharge almost 2 years ago. I have however obtained a credit card since then and have made regular timely payments that hopefully is going to help me rebuild.

My question is about APR. I have gone online and been approved for a loan from the Capital One Auto Finance and they are sending me a BlankCheck for me to purchase a vehicle with. The problem is the APR = 16.95%. This is WAY too high to finance a vehicle with. Though I think that taking this blank check to a dealer might help me get a lower APR though the dealership...is that a fair assumption? Also, if I were to use the blank check for a vehicle (say $14000), when can I expect to be able to refinance for a lower APR?

tidester · December 2006

when can I expect to be able to refinance for a lower APR?

Isn't that a bit risky? You may not be able to refinance and you'll be stuck with some astronomical payments.

tidester, host

beckettbank · December 2006

It seems that I just have some cleaning up to do on my credit report. A few of the accounts that should have been included in bankruptcy are still being shown on my credit report as "charge-offs". I am disputing these and hopefully it will give me a little help.

steveinvt · December 2006

Beckettbank:

I agree with Tidester, it is really risky to buy a car at 17% interest in the hope that your interest rate will come down. Keep in mind that a car is a depreciating asset, so if you were to get in to an accident 24 months down the road your loan would still be will well in excess of the value of your insurance compensation.

wlbrown9 · December 2006

You probably need to find out your credit score as well. Then go to a bank or credit union and find out what rate they will give you. It may be more or less than the 17% you have now. But at that point you will know the worst case you will have. Dealer may be able to get a lower rate but you will not know that until you start working with them.

You may want to look into GAP insurance especially if you will be financing with low down payment and/or high interest rate since as STEVEINVT noted you may be upside down on your loan for quite awhile.

nj2pa2nc · December 2006

i know if your loan is from Honda Finance the more you pay each month the quicker the loan will be paid and the interest will be adjusted accordingly. I have a tsx, financed for 60 months. the payments are due on the 1st of each month.($198.28 a month) I pay $300.00 a months 10 days before the due date which also lowers the interest. If you pay it online you will be able to keep track how the balance goes down (acura owner link)

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